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Loan Growth, Higher Rates to Aid Zions' (ZION) Q2 Earnings

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Zions Bancorporation (ZION - Free Report) is scheduled to report second-quarter 2022 results on Jul 26, after market close. The overall loan demand was impressive in the to-be-reported quarter. Specifically, growth in commercial and industrial loan balances (which constitute a large part of Zions’ loan portfolio) was solid.

The Zacks Consensus Estimate for the company’s average interest-earning assets for the second quarter is pegged at $86.9 billion, which indicates a rise of 7.3% from the prior-year quarter’s reported number.

Thus, supported by the rise in loan balances, along with higher interest rates (the Federal Reserve increased interest rates by 125 basis points in the quarter), Zions’ net interest income (NII), which is its main revenue component, is expected to have improved. The consensus estimate for second-quarter NII of $583 million indicates a year-over-year rise of 5%.

Other Key Factors and Estimates for Q2

Fee Revenues: Rising mortgage rates (that touched a 14-year high in June) weighed on mortgage originations and refinancing activities in the second quarter. Thus, due to the not-so-impressive mortgage-banking business performance, Zions’ loan sales and servicing income is not expected to have improved much in the quarter. The Zacks Consensus Estimate for the same is pegged at $21.28 million, suggesting a 1.3% rise from the prior-year quarter’s reported number.

The consensus estimate for commercial account fees of $36.21 million indicates a year-over-year rise of 6.5%. Similarly, the consensus estimate for card fees of $25.92 million suggests a rise of 8% from the previous year.

The consensus estimate for retail and business banking fees is pegged at $20.30 million, suggesting a 12.8% year-over-year rise. The estimate for capital markets and foreign exchange fees of $16.83 million indicates a year-over-year fall of 1%.

Driven by the expected rise in almost all components, customer-related fee (accounting for more than 85% of Zions’ total non-interest income) is anticipated to have improved in the quarter. The consensus estimate for the same is pegged at $155 million, which indicates a rise of 11.5% from the prior-year quarter’s reported figure.

The consensus estimate for dividends and other income is pegged at $5.71 million, indicating a decline of 28.6% from the prior-year quarter’s reported number.

The consensus estimate for total non-interest income indicates that the component will decline in the quarter. The estimate is pegged at $155 million, suggesting a fall of 24.4% from the prior-year quarter’s reported figure.

Expenses: Zions has been witnessing a persistent rise in operating expenses over the past few years. As the company continues to invest in franchise, overall costs are expected to have been elevated in the second quarter.

Asset Quality: The Zacks Consensus Estimate for total non-performing loans is pegged at $285 million, suggesting a decline of 7.2% from the prior-year quarter’s reported figure.

What Our Quantitative Model Predicts

According to our quantitative model, the chances of Zions beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Zions is +0.54%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

Q2 Earnings & Sales Growth Expectations

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.35 per share, which suggests a decline of 35.1% from the year-ago quarter’s reported number. The estimate has been unchanged over the past 30 days.

The consensus estimate for sales is pegged at $745.6 million, which indicates a decline of 1.9% from the prior-year reported figure.

Zions Bancorporation, N.A. Price and EPS Surprise

 

Zions Bancorporation, N.A. Price and EPS Surprise

Zions Bancorporation, N.A. price-eps-surprise | Zions Bancorporation, N.A. Quote

Other Stocks That Warrant a Look

A couple of other finance stocks, which you may want to consider as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model, are Regions Financial (RF - Free Report) and First Interstate BancSystem (FIBK - Free Report) .

The Earnings ESP for Regions Financial is +0.89% and it carries a Zacks Rank #3 at present. RF is slated to report second-quarter 2022 results on Jul 22.

First Interstate BancSystem is scheduled to release quarterly results on Jul 26. FIBK currently sports a Zacks Rank #1 (Strong Buy) and has an Earnings ESP of +7.14%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.